VPNs changing for good

DQW Bureau
30 Jun 2009

In today's tough times when the economic slowdown has taken a toll on all,
maximum use of corporate network resources can be a decisive factor in enabling
businesses reduce costs and increase productivity. The times and needs today
have undergone a sea change. The need of the hour is reliable communication,
which is cost-effective as well as fast enough to keep up with the pace of

The flow of information was till recently maintained by leased lines, ranging
from Integrated Services Digital Network (ISDN) to OC3 fibers. But as the
popularity of the Internet grew, businesses turned to extending their own
networks. Now, many companies are creating their own virtual private network (VPN)
to accommodate the needs of remote employees and distant offices. A VPN, as we
know, uses 'tunneling' to encrypt all information at the IP level.

The changed scenario

Until recently, IP VPN used to form the staple of the industry. Then came the
SSL VPN using secure sockets layer, an authentication and encryption technology
build into web browser to build a more secure and reliable VPN and then the
technology ushered into setting a new era by adopting a new innovation in the
form of multi protocol label switching (MPLS) routing.

The complete range of communications technology has set new standards for
service providers to attain. As K Krishna, Asst VP- Marketing and CTO, Hughes
Communication India said, “With telcos giving a tough competition to most
service providers, it essentially became a challenge to modify our strategies to
suit the changing times as well as customer needs.” Traditionally, leased lines
have been the preferred mode of wire line connectivity between company locations
in different cities. The primary reason for the popularity of this technology is
that there was no alternative in terms of broadband wide area connectivity until

As telcos took the steam off the market by making substantial investment in
core infrastructure, this market dominance was challenged by companies offering
an array of advantages.

Vendors believe that the key to success lies in effective cost-cutting to
integrate services into scalable and dependable networks. Hughes has become one
of the leading VPN providers. As Krishna said,“Managed services is an area where
we have re-focused our energy for enterprise customers. Hughes has a long
history in managed private services in the US, Europe, and Asia, ranging in size
up to 10,000 and above sites in a single network.

Strategically noteworthy

Hughes came with the innovative idea of broadband VPN when the world was not
only looking for optimization and connectivity, but also at cost cutting
strategies. MPLS VPN, which costs around Rs 60,000 seemed a big amount for
corporates with many outlets and offices around the globe. But with the
'value-for-money' offer given by broadband VPN at near MPLS grade services at
around Rs 30,000, the technology gained an edge.

Broadband technology is a combination of three-WiMax, satellite, and
broadband. Thanks to the global slowdown, the reduced costs and effective
services provided were enough to turn the heads of investors, speculators,
hedgers and consumers. Hughes customized its offerings to suit the changing
needs of the customers. It tied up with Airtel, Tata, BSNL and MTNL to provide
connectivity into the most remote areas.

Growth is directly dependent on geographical location and customized
services, which in the present scenario is provided by broadband VPN. In order
to create ideal WAN, the company buys bandwidth from telcos and then builds
in-house VPN. Highly skilled research and managed services operation have gone
in to making it comparable with MPLS VPN. Hughes performance in the competitive
Indian market remains impressive, despite stiff competition.

Reliance had also come up with India's first global MPLS services in
association with communication giant MCI, but according to Frost & Sullivan,
Tulip Telecom is the largest domestic MPLS/IP-VPN provider in the country with a
market share of around 40 percent.

Rising trends

A recent report by Frost & Sullivan reveals that IP/MPLS VPN market reached
a total value of Rs 1,741 crore in FY '08, exhibiting an increase of 62.4
percent over FY '07. With an expected growth rate of 53.4 percent in the current
year, this market is poised to reach Rs 9,017 crore by FY'13, exhibiting a CAGR
of 38.9 percent over the forecast period. The report further expects the
enterprise data services market to grow from Rs 5,154 crore in FY'08 to Rs
15,423 crore in FY '13, a CAGR of 24.5 percent over this period.

Some of the upcoming trends that will influence the VPN market are:

  • Adoption of new technologies and expanding mobile workforces are the main
    factors that have changed the virtual private network landscape
  • VPNs have grown in popularity as the enterprises focus more on saving
  • The surge in demand for VPN services is primarily owing to the fact that
    MPLS VPNs have addressed all security concerns across enterprises
  • Broadband VPNs cost-effective strategies will challenge the MPLS

Archana Singh

(Source: DQ)

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